Fuzzy Estimates of Singapore’s Digital Trade

By Ashish Lall | January 27, 2022, 10.00am SGT

Photo by Peter Nguyen on unsplash.

A quick web search will show that much has been written about digital trade policy and barriers to digital trade. Yet, according to the OECD ,“there is no single recognized and accepted definition of digital trade”. For now, it’s best to think of digital trade as digitally initiated trade in goods and services regardless of whether they are delivered physically or digitally.

Estimates of digital trade are hard to come by. But it is now possible to estimate potentially digitally delivered services trade or, potentially ICT-enabled trade in services. Recently, the World Trade Organization (WTO) released some experimental estimates of Trade in Services by Mode of Supply (TiSMoS).

TiSMoS is fuzzy to begin with since it is an analytical database, meaning that some numbers are real numbers whereas others are constructed using statistical techniques. In addition, certain simplified allocations are made to the various modes of supply. But this is progress. Fuzzy data are better than no data.

The General Agreement on Trade in Services (GATS) recognizes four modes of supply. Mode 1, or cross-border supply provides an upper bound to digital trade since it does not clearly segregate digital flows from non-digital ones. For example, the purchase of advisory services from a foreign supplier are classified as Mode 1, regardless of whether they were ordered and/or delivered online, via email, telephone, fax or by post. While a few services such as computing & telecommunications services are clearly digital, the majority, such as finance, consulting and education services are digitizable.

Over the period 2005 to 2017, Singapore’s total (exports + imports) digital trade grew at an average annual compound rate of 12.7%. In 2017, the most recent year for which data are available, Singapore’s total digital trade stood at USD 174 billion. This was 22 times that of Chile’s and 24 times that of New Zealand’s. These are the two countries with which Singapore signed the Digital Economy Partnership Agreement (DEPA) in 2020.

Exhibit 1 shows exports and imports for various digital (and digitizable or potentially ICT-enabled) services using a classification proposed by UNCTAD in 2015. Singapore was a net exporter of sales & marketing services, information services and finance & insurance services. Overall, in 2017 Singapore’s exports were USD 88.5 billion and imports were USD 85.5 billion.

Exhibit 2 shows the shares of various digital services in total trade. Data on exports shares suggest that Singapore has strengths in exporting sales & marketing services, finance & insurance services, and management & administration services. These three categories are over-represented in Singapore’s digital export basket relative to that of the world.

Sorting out the definitional and measurement and data collection issues will take some time. Until then, fuzzy data suggest that Singapore’s total digital trade is at most, about 50% of nominal GDP.